Houston Lighting and Power Company Evaluation of Compressed Air Energy Storage

Compressed air energy storage (CAES) is a resource being evaluated by Houston Lighting and Power Company (HL&P). There is underground salt formation suitable for CAES development around HL&P's service area. This paper presents the results of a preliminary economic analysis of a 660 MW CAES plant in 1994 in comparison with a coal/lignite plant. Sensitivity analysis was conducted to examine the effect of off-peak charging energy from outside systems and the effect of gas prices. Results indicated that the CAES plant had a benefit to cost ratio of 1.15 which would be raised above 1.5 if off-system charging energy at a reasonable price could be obtained. Decreasing gas price would favor CAES in comparison with coal or lignite. The CAES plant in operation would save 5 to 13 million mcf of gas per year.